DRAFT
EXHIBIT 8(g)
PARTICIPATION AGREEMENT
AMONG TEMPLETON VARIABLE PRODUCTS SERIES FUND,
FRANKLIN XXXXXXXXX DISTRIBUTORS, INC. and
KEYPORT BENEFIT LIFE INSURANCE COMPANY
THIS AGREEMENT made as of May 1, 1999, among Templeton Variable
Products Series Fund (the "Trust"), an open-end management investment
company organized as a business trust under Massachusetts law,
Franklin Xxxxxxxxx Distributors, Inc., a California corporation, the
Trust's principal underwriter ("Underwriter"), and Keyport Benefit
Life Insurance Company, a life insurance company organized as a
corporation under Rhode IslandNew York law (the "Company"), on its own
behalf and on behalf of each segregated asset account of the Company
set forth in Schedule A, as may be amended from time to time (the
"Accounts").
W I T N E S S E T H:
WHEREAS, the Trust is registered with the Securities and Exchange
Commission (the "SEC") as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"),
and has an effective registration statement relating to the offer and
sale of the various series of its shares under the Securities Act of
1933, as amended (the "1933 Act");
WHEREAS, the Trust and the Underwriter desire that Trust shares
be used as an investment vehicle for separate accounts established for
variable life insurance policies and variable annuity contracts to be
offered by life insurance companies which have entered into fund
participation agreements with the Trust (the "Participating Insurance
Companies");
WHEREAS, the beneficial interest in the Trust is divided into
several series of shares, each series representing an interest in a
particular managed portfolio of securities and other assets, and
certain of those series, named in Schedule B, (the "Portfolios") are
to be made available for purchase by the Company for the Accounts; and
WHEREAS, the Trust has received an order from the SEC, dated
November 16, 1993 (File No. 812-8546), granting Participating
Insurance Companies and their separate accounts exemptions from the
provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act,
and Rules 6e-2 (b) (15) and 6e-3 (T) (b) (15) thereunder, to the
extent necessary to permit shares of the Trust to be sold to and held
by variable annuity and variable life insurance separate accounts of
both affiliated and unaffiliated life insurance companies and certain
qualified pension and retirement plans (the "Shared Funding Exemptive
Order");
WHEREAS, the Company has registered or will register each Account
as a unit investment trust under the 1940 Act unless an exemption from
registration under the 1940 Act is available and the Trust has been so
advised; and has registered or will register certain variable annuity
contracts and variable life insurance policies, listed on Schedule C
attached hereto, under which the portfolios are to be made available
as investment vehicles (the "Contracts") under the 1933 Act unless
such interests under the Contracts in the Accounts are exempt from
registration under the 1933 Act and the Trust has been so advised;
WHEREAS, each Account is a duly organized, validly existing
segregated asset account, established by resolution of the Board of
Directors of the Company, on the date shown for such account on
Schedule A hereto, to set aside and invest assets attributable to one
or more Contracts; and
WHEREAS, the Underwriter is registered as a broker dealer with
the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended (the "1934 Act"), and is a member in good
standing of the National Association of Securities Dealers, Inc.
("NASD"); and
WHEREAS, each investment adviser listed on Schedule B (each, an
"Adviser") is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended ("Advisers Act") and any
applicable state securities laws;
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios
on behalf of each Account to fund certain of the aforesaid Contracts
and the Underwriter is authorized to sell such shares to unit
investment trusts such as each Account at net asset value;
NOW THEREFORE, in consideration of their mutual promises, the
parties agree as follows:
ARTICLE I.
Purchase and Redemption of Trust Portfolio Shares
1.1 For purposes of this Article I, the Company shall be the
Trust's designee for receipt of purchase orders and requests for
redemption relating to each Portfolio from each Account, provided that
the Company notifies the Trust of such purchase orders and requests
for redemption by 9:00 a.m. Eastern time on the next following
Business Day, as defined in Section 1.3.
1.2 The Trust agrees to make shares of the Portfolios available
to the Accounts for purchase at the net asset value per share next
computed after receipt of a purchase order by the Trust (or its
designee), as established in accordance with the provisions of the
then current prospectus of the Trust describing Portfolio purchase
procedures on those days on which the Trust calculates its net asset
value pursuant to rules of the SEC, and the Trust shall use its best
efforts to calculate such net asset value on each day on which the New
York Stock Exchange ("NYSE") is open for trading. The Company will
transmit orders from time to time to the Trust for the purchase of
shares of the Portfolios. The Trustees of the Trust (the "Trustees")
may refuse to sell shares of any Portfolio to any person, or suspend
or terminate the offering of shares of any Portfolio if such action is
required by law or by regulatory authorities having jurisdiction or
if, in the sole discretion of the Trustees acting in good faith and in
light of their fiduciary duties under federal and any applicable state
laws, such action is deemed in the best interests of the shareholders
of such Portfolio.
1.3 The Company shall submit payment for the purchase of shares
of a Portfolio on behalf of an Account no later than the close of
business on the next Business Day after the Trust receives the
purchase order. Payment shall be made in federal funds transmitted by
wire to the Trust or its designated custodian. Upon receipt by the
Trust of the federal funds so wired, such funds shall cease to be the
responsibility of the Company and shall become the responsibility of
the Trust for this purpose. "Business Day" shall mean any day on which
the NYSE is open for trading and on which the Trust calculates its net
asset value pursuant to the rules of the SEC.
1.4 The Trust will redeem for cash any full or fractional shares
of any Portfolio, when requested by the Company on behalf of an
Account, at the net asset value next computed after receipt by the
Trust (or its designee) of the request for redemption, as established
in accordance with the provisions of the then current prospectus of
the Trust describing Portfolio redemption procedures. The Trust shall
make payment for such shares in the manner established from time to
time by the Trust. Redemption with respect to a Portfolio will
normally be paid to the Company for an Account in federal funds
transmitted by wire to the Company before the close of business on the
next Business Day after the receipt of the request for redemption.
Such payment may be delayed if, for example, the Portfolio's cash
position so requires or if extraordinary market conditions exist, but
in no event shall payment be delayed for a greater period than is
permitted by the 0000 Xxx.
1.5 Payments for the purchase of shares of the Trust's Portfolios
by the Company under Section 1.3 and payments for the redemption of
shares of the Trust's Portfolios under Section 1.4 may be netted
against one another on any Business Day for the purpose of determining
the amount of any wire transfer on that Business Day.
1.6 Issuance and transfer of the Trust's Portfolio shares will be
by book entry only. Stock certificates will not be issued to the
Company or the Account. Portfolio Shares purchased from the Trust will
be recorded in the appropriate title for each Account or the
appropriate subaccount of each Account.
1.7 The Trust shall furnish, on or before the ex-dividend date,
notice to the Company of any income dividends or capital gain
distributions payable on the shares of any Portfolio of the Trust. The
Company hereby elects to receive all such income dividends and capital
gain distributions as are payable on a Portfolio's shares in
additional shares of the Portfolio. The Trust shall notify the Company
of the number of shares so issued as payment of such dividends and
distributions.
1.8 The Trust shall calculate the net asset value of each
Portfolio on each Business Day, as defined in Section 1.3. The Trust
shall make the net asset value per share for each Portfolio available
to the Company or its designated agent on a daily basis as soon as
reasonably practical after the net asset value per share is calculated
(normally by 6:30 p.m. Eastern time) and shall use reasonable efforts
to make such net asset value per share available by 7:00 p.m. Eastern
time each Business Day.
1.9 The Trust agrees that its Portfolio shares will be sold only
to Participating Insurance Companies and their separate accounts and
to certain qualified pension and retirement plans to the extent
permitted by the Shared Funding Exemptive Order. No shares of any
Portfolio will be sold directly to the general public. The Company
agrees that it will use Trust shares only for the purposes of funding
the Contracts through the Accounts listed in Schedule A, as amended
from time to time.
1.10 The Company agrees that all net amounts available under the
Contracts shall be invested in the Trust, in such other Funds advised
by an Adviser or its affiliates as may be mutually agreed to in
writing by the parties hereto, or in the Company's general account,
provided that such amounts may also be invested in an investment
company other than the Trust if: (a) such other investment company, or
series thereof, has investment objectives or policies that are
substantially different from the investment objectives and policies of
the Portfolios; or (b) the Company gives the Trust and the Underwriter
45 days written notice of its intention to make such other investment
company available as a funding vehicle for the Contracts; or (c) such
other investment company is available as a funding vehicle for the
Contracts at the date of this Agreement and the Company so informs the
Trust and the Underwriter prior to their signing this Agreement (a
list of such investment companies appearing on Schedule D to this
Agreement); or (d) the Trust or Underwriter consents to the use of
such other investment company.
1.11 The Trust agrees that all Participating Insurance Companies
shall have the obligations and responsibilities regarding pass-through
voting and conflicts of interest corresponding to those contained in
Section 2.10 and Article IV of this Agreement.
1.12 Each party to this Agreement shall have the right to rely on
information or confirmations provided by any other party (or by any
affiliate of any other party), and shall not be liable in the event
that an error results from any incorrect information or confirmations
supplied by any other party. If an error is made in reliance upon
incorrect information or confirmations, any amount required to make a
Contract owner's account whole shall be borne by the party who
provided the incorrect information or confirmation.
ARTICLE II.
Obligations of the Parties; Fees and Expenses
2.1 The Trust shall prepare and be responsible for filing with
the SEC and any state regulators requiring such filing all shareholder
reports, notices, proxy materials (or similar materials such as voting
instruction solicitation materials), prospectuses and statements of
additional information of the Trust. The Trust shall bear the costs of
registration and qualification of its shares of the Portfolios,
preparation and filing of the documents listed in this Section 2.1 and
all taxes to which an issuer is subject on the issuance and transfer
of its shares.
2.2 At the option of the Company, the Trust or the Underwriter
shall either (a) provide the Company with as many copies of portions
of the Trust's current prospectus, annual report, semi-annual report
and other shareholder communications, including any amendments or
supplements to any of the foregoing, pertaining specifically to the
Portfolios as the Company shall reasonably request; or (b) provide the
Company with a camera ready copy of such documents in a form suitable
for printing and from which information relating to series of the
Trust other than the Portfolios has been deleted to the extent
practicable. The Trust or the Underwriter shall provide the Company
with a copy of its current statement of additional information,
including any amendments or supplements, in a form suitable for
duplication by the Company. Expenses of furnishing such documents for
marketing purposes shall be borne by the Company and expenses of
furnishing such documents for current contract owners invested in the
Trust shall be borne by the Trust or the Underwriter.
2.3 The Trust (at its expense) shall provide the Company with
copies of any Trust-sponsored proxy materials in such quantity as the
Company shall reasonably require for distribution to Contract owners.
The Company shall bear the costs of distributing proxy materials (or
similar materials such as voting solicitation instructions),
prospectuses and statements of additional information to Contract
owners. The Company assumes sole responsibility for ensuring that such
materials are delivered to Contract owners in accordance with
applicable federal and state securities laws.
2.4 If and to the extent required by law, the Company shall: (i)
solicit voting instructions from Contract owners; (ii) vote the Trust
shares in accordance with the instructions received from Contract
owners; and (iii) vote Trust shares for which no instructions have
been received in the same proportion as Trust shares of such Portfolio
for which instructions have been received; so long as and to the
extent that the SEC continues to interpret the 1940 Act to require
pass-through voting privileges for variable contract owners. The
Company reserves the right to vote Trust shares held in any segregated
asset account in its own right, to the extent permitted by law.
2.5 Except as provided in section 2.6, the Company shall not use
any designation comprised in whole or part of the names or marks
"Franklin" or "Xxxxxxxxx" or any other Trademark relating to the Trust
or Underwriter without prior written consent, and upon termination of
this Agreement for any reason, the Company shall cease all use of any
such name or xxxx as soon as reasonably practicable.
2.6 The Company shall furnish, or cause to be furnished to the
Trust or its designee, at least one complete copy of each registration
statement, prospectus, statement of additional information, retirement
plan disclosure information or other disclosure documents or similar
information, as applicable (collectively "disclosure documents"), as
well as any report, solicitation for voting instructions, sales
literature and other promotional materials, and all amendments to any
of the above that relate to the Contracts or the Accounts prior to its
first use. The Company shall furnish, or shall cause to be furnished,
to the Trust or its designee each piece of sales literature or other
promotional material in which the Trust or an Adviser is named, at
least 15 Business Days prior to its use. No such material shall be
used if the Trust or its designee reasonably objects to such use
within five Business Days after receipt of such material. For purposes
of this paragraph, "sales literature or other promotional material"
includes, but is not limited to, portions of the following that use
any Trademark related to the Trust or Underwriter or refer to the
Trust or affiliates of the Trust: advertisements (such as material
published or designed for use in a newspaper, magazine or other
periodical, radio, television, telephone or tape recording, videotape
display, signs or billboards, motion pictures or electronic
communication or other public media), sales literature (i.e., any
written communication distributed or made generally available to
customers or the public, including brochures, circulars, research
reports, market letters, form letters, seminar texts, reprints or
excerpts or any other advertisement, sales literature or published
article or electronic communication), educational or training
materials or other communications distributed or made generally
available to some or all agents or employees, and disclosure
documents, shareholder reports and proxy materials.
2.7 The Company and its agents shall not give any information or
make any representations or statements on behalf of the Trust or
concerning the Trust, the Underwriter or an Adviser in connection with
the sale of the Contracts other than information or representations
contained in and accurately derived from the registration statement or
prospectus for the Trust shares (as such registration statement and
prospectus may be amended or supplemented from time to time), annual
and semi-annual reports of the Trust, Trust-sponsored proxy
statements, or in sales literature or other promotional material
approved by the Trust or its designee, except as required by legal
process or regulatory authorities or with the written permission of
the Trust or its designee.
2.8 The Trust shall use its best efforts to provide the Company,
on a timely basis, with such information about the Trust, the
Portfolios and each Adviser, in such form as the Company may
reasonably require, as the Company shall reasonably request in
connection with the preparation of disclosure documents and annual and
semi-annual reports pertaining to the Contracts.
2.9 The Trust shall not give any information or make any
representations or statements on behalf of the Company or concerning
the Company, the Accounts or the Contracts other than information or
representations contained in and accurately derived from disclosure
documents for the Contracts (as such disclosure documents may be
amended or supplemented from time to time), or in materials approved
by the Company for distribution including sales literature or other
promotional materials, except as required by legal process or
regulatory authorities or with the written permission of the Company.
2.10 So long as, and to the extent that, the SEC interprets the
1940 Act to require pass-through voting privileges for Contract
owners, the Company will provide pass-through voting privileges to
Contract owners whose Contract values are invested, through the
registered Accounts, in shares of one or more Portfolios of the Trust.
The Trust shall require all Participating Insurance Companies to
calculate voting privileges in the same manner and the Company shall
be responsible for assuring that the Accounts calculate voting
privileges in the manner established by the Trust. With respect to
each registered Account, the Company will vote shares of each
Portfolio of the Trust held by a registered Account and for which no
timely voting instructions from Contract owners are received in the
same proportion as those shares held by that registered Account for
which voting instructions are received. The Company and its agents
will in no way recommend or oppose or interfere with the solicitation
of proxies for Portfolio shares held to fund the Contracts without the
prior written consent of the Trust, which consent may be withheld in
the Trust's sole discretion.
2.11 The Trust and Underwriter shall pay no fee or other
compensation to the Company under this Agreement except as provided on
Schedule E, if attached. Nevertheless, the Trust or the Underwriter
or an affiliate may make payments (other than pursuant to a Rule 12b-1
Plan) to the Company or its affiliates or to the Contracts'
underwriter in amounts agreed to by the Underwriter in writing and
such payments may be made out of fees otherwise payable to the
Underwriter or its affiliates, profits of the Underwriter or its
affiliates, or other resources available to the Underwriter or its
affiliates.
ARTICLE III.
Representations and Warranties
3.1 The Company represents and warrants that it is an insurance
company duly organized and in good standing under the laws of its
state of incorporation and that it has legally and validly established
each Account as a segregated asset account under such law as of the
date set forth in Schedule A.
3.2 The Company represents and warrants that, with respect to
each Account, (1) the Company has registered or, prior to any issuance
or sale of the Contracts, will register the Account as a unit
investment trust in accordance with the provisions of the 1940 Act to
serve as a segregated asset account for the Contracts, or (2) if the
Account is exempt from registration as an investment company under
Section 3(c) of the 1940 Act, the Company will make every effort to
maintain such exemption and will notify the Trust and the Adviser
immediately upon having a reasonable basis for believing that such
exemption no longer applies or might not apply in the future.
3.3 The Company represents and warrants that, with respect to
each Contract, (1) the Contract will be registered under the 1933 Act,
or (2) if the Contract is exempt from registration under Section
3(a)(2) of the 1933 Act or under Section 4(2) and Regulation D of the
1933 Act, the Company will make every effort to maintain such
exemption and will notify the Trust and the Adviser immediately upon
having a reasonable basis for believing that such exemption no longer
applies or might not apply in the future. The Company further
represents and warrants that the Contracts will be sold by broker-
dealers, or their registered representatives, who are registered with
the SEC under the 1934 Act and who are members in good standing of the
NASD; the Contracts will be issued and sold in compliance in all
material respects with all applicable federal and state laws; and the
sale of the Contracts shall comply in all material respects with state
insurance suitability requirements.
For any unregistered Accounts which are exempt from
registration under the `40 Act in reliance upon Sections 3(c)(1)
or 3(c)(7) thereof, the Company represents and warrants that:
(a) each Account and sub-account thereof has a principal
underwriter which is registered as a broker-dealer
under the Securities Exchange Act of 1934, as amended;
(b) Trust shares are and will continue to be the only
investment securities held by the corresponding Account
sub-accounts; and
(c) with regard to each Portfolio, the Company, on behalf
of the corresponding sub-account, will:
(1) seek instructions from all Contract owners with
regard to the voting of all proxies with respect
to Trust shares and vote such proxies only in
accordance with such instructions or vote such
shares held by it in the same proportion as the
vote of all other holders of such shares; and
(2) refrain from substituting shares of another
security for such shares unless the SEC has
approved such substitution in the manner provided
in Section 26 of the x00 Xxx.
3.4 The Trust represents and warrants that it is duly organized
and validly existing under the laws of the State of Massachusetts and
that it does and will comply in all material respects with the 1940
Act and the rules and regulations thereunder.
3.5 The Trust represents and warrants that the Portfolio shares
offered and sold pursuant to this Agreement will be registered under
the 1933 Act and the Trust shall be registered under the 1940 Act
prior to and at the time of any issuance or sale of such shares. The
Trust shall amend its registration statement under the 1933 Act and
the 1940 Act from time to time as required in order to effect the
continuous offering of its shares. The Trust shall register and
qualify its shares for sale in accordance with the laws of the various
states only if and to the extent deemed advisable by the Trust or the
Underwriter.
3.6 The Trust represents and warrants that the investments of
each Portfolio will comply with the diversification requirements for
variable annuity, endowment or life insurance contracts set forth in
Section 817(h) of the Internal Revenue Code of 1986, as amended
("Code"), and the rules and regulations thereunder, including without
limitation Treasury Regulation 1.817-5, and will notify the Company
immediately upon having a reasonable basis for believing any Portfolio
has ceased to comply or might not so comply and will in that event
immediately take all reasonable steps to adequately diversify the
Portfolio to achieve compliance within the grace period afforded by
Regulation 1.817-5.
3.7 The Trust represents and warrants that it is currently
qualified as a "regulated investment company" under Subchapter M of
the Code, that it will make every effort to maintain such
qualification and will notify the Company immediately upon having a
reasonable basis for believing it has ceased to so qualify or might
not so qualify in the future.
3.8 The Trust represents and warrants that should it ever desire
to make any payments to finance distribution expenses pursuant to Rule
12b-1 under the 1940 Act, the Trustees, including a majority who are
not "interested persons" of the Trust under the 1940 Act (
"disinterested Trustees" ), will formulate and approve any plan under
Rule 12b-1 to finance distribution expenses.
3.9 The Trust represents and warrants that it, its directors,
officers, employees and others dealing with the money or securities,
or both, of a Portfolio shall at all times be covered by a blanket
fidelity bond or similar coverage for the benefit of the Trust in an
amount not less that the minimum coverage required by Rule 17g-1 or
other regulations under the 1940 Act. Such bond shall include coverage
for larceny and embezzlement and be issued by a reputable bonding
company.
3.10 The Company represents and warrants that all of its
directors, officers, employees, investment advisers, and other
individuals or entities dealing with the money and/or securities of
the Trust are and shall be at all times covered by a blanket fidelity
bond or similar coverage for the benefit of the Trust, in an amount
not less than $5 million. The aforesaid bond shall include coverage
for larceny and embezzlement and shall be issued by a reputable
bonding company. The Company agrees to make all reasonable efforts to
see that this bond or another bond containing these provisions is
always in effect, and agrees to notify the Trust and the Underwriter
in the event that such coverage no longer applies.
3.11 The Underwriter represents that each Adviser is duly
organized and validly existing under applicable corporate law and that
it is registered and will during the term of this Agreement remain
registered as an investment adviser under the Advisers Act.
3.12 The Trust currently intends for one or more classes of
shares (each, a "Class") to make payments to finance its distribution
expenses, including service fees, pursuant to a Plan adopted under
Rule 12b-1 under the 1940 Act ("Rule 12b-1"), although it may
determine to discontinue such practice in the future. To the extent
that any Class of the Trust finances its distribution expenses
pursuant to a Plan adopted under Rule 12b-1, the Trust undertakes to
comply with any then current SEC and SEC staff interpretations
concerning Rule 12b-1 or any successor provisions.
ARTICLE IV.
Potential Conflicts
4.1 The parties acknowledge that a Portfolio's shares may be made
available for investment to other Participating Insurance Companies.
In such event, the Trustees will monitor the Trust for the existence
of any material irreconcilable conflict between the interests of the
contract owners of all Participating Insurance Companies. An
irreconcilable material conflict may arise for a variety of reasons,
including: (a) an action by any state insurance regulatory authority;
(b) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by
insurance, tax, or securities regulatory authorities; (c) an
administrative or judicial decision in any relevant proceeding; (d)
the manner in which the investments of any Portfolio are being
managed; (e) a difference in voting instructions given by variable
annuity contract and variable life insurance contract owners; or (f) a
decision by an insurer to disregard the voting instructions of
contract owners. The Trust shall promptly inform the Company of any
determination by the Trustees that an irreconcilable material conflict
exists and of the implications thereof.
4.2 The Company agrees to promptly report any potential or
existing conflicts of which it is aware to the Trustees. The Company
will assist the Trustees in carrying out their responsibilities under
the Shared Funding Exemptive Order by providing the Trustees with all
information reasonably necessary for the Trustees to consider any
issues raised including, but not limited to, information as to a
decision by the Company to disregard Contract owner voting
instructions. All communications from the Company to the Trustees may
be made in care of the Trust.
4.3 If it is determined by a majority of the Trustees, or a
majority of the disinterested Trustees, that a material irreconcilable
conflict exists that affects the interests of Contract owners, the
Company shall, in cooperation with other Participating Insurance
Companies whose contract owners are also affected, at its own expense
and to the extent reasonably practicable (as determined by the
Trustees) take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, which steps could include: (a)
withdrawing the assets allocable to some or all of the Accounts from
the Trust or any Portfolio and reinvesting such assets in a different
investment medium, including (but not limited to) another Portfolio of
the Trust, or submitting the question of whether or not such
withdrawal should be implemented to a vote of all affected Contract
owners and, as appropriate, withdrawal of the assets of any
appropriate group (i.e. , annuity contract owners, life insurance
policy owners, or variable contract owners of one or more
Participating Insurance Companies) that votes in favor of such
withdrawal, or offering to the affected Contract owners the option of
making such a change; and (b) establishing a new registered management
investment company or managed separate account.
4.4 If a material irreconcilable conflict arises because of a
decision by the Company to disregard Contract owner voting
instructions and that decision represents a minority position or would
preclude a majority vote, the Company may be required, at the Trust's
election, to withdraw the affected Account's investment in the Trust
and terminate this Agreement with respect to such Account; provided,
however, that such withdrawal and termination shall be limited to the
extent required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested Trustees. Any such
withdrawal and termination must take place within six (6) months after
the Trust gives written notice that this provision is being
implemented. Until the end of such six (6) month period, the Trust
shall continue to accept and implement orders by the Company for the
purchase and redemption of shares of the Trust.
4.5 If a material irreconcilable conflict arises because a
particular state insurance regulator's decision applicable to the
Company conflicts with a majority of other state regulators, then the
Company will withdraw the affected Account's investment in the Trust
and terminate this Agreement with respect to such Account within six
(6) months after the Trustees inform the Company in writing that it
has determined that such decision has created an irreconcilable
material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of the
disinterested Trustees. Until the end of such six (6) month period,
the Trust shall continue to accept and implement orders by the Company
for the purchase and redemption of shares of the Trust.
4.6 For purposes of Sections 4.3 through 4.6 of this Agreement, a
majority of the disinterested Trustees shall determine whether any
proposed action adequately remedies any irreconcilable material
conflict, but in no event will the Trust be required to establish a
new funding medium for the Contracts. In the event that the Trustees
determine that any proposed action does not adequately remedy any
irreconcilable material conflict, then the Company will withdraw the
Account's investment in the Trust and terminate this Agreement within
six (6) months after the Trustees inform the Company in writing of the
foregoing determination; provided, however, that such withdrawal and
termination shall be limited to the extent required by any such
material irreconcilable conflict as determined by a majority of the
disinterested Trustees.
4.7 The Company shall at least annually submit to the Trustees
such reports, materials or data as the Trustees may reasonably request
so that the Trustees may fully carry out the duties imposed upon them
by the Shared Funding Exemptive Order, and said reports, materials and
data shall be submitted more frequently if reasonably deemed
appropriate by the Trustees.
4.8 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are
amended, or Rule 6e-3 is adopted, to provide exemptive relief from any
provision of the 1940 Act or the rules promulgated thereunder with
respect to mixed or shared funding (as defined in the Shared Funding
Exemptive Order) on terms and conditions materially different from
those contained in the Shared Funding Exemptive Order, then the Trust
and/or the Participating Insurance Companies, as appropriate, shall
take such steps as may be necessary to comply with Rules 6e-2 and 6e-
3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules
are applicable.
ARTICLE V.
Indemnification
5.1 Indemnification By the Company
(a) The Company agrees to indemnify and hold harmless the
Underwriter, the Trust and each of its Trustees, officers,
employees and agents and each person, if any, who controls the
Trust within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" and individually the
"Indemnified Party" for purposes of this Article V) against any
and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Company, which
consent shall not be unreasonably withheld) or expenses
(including the reasonable costs of investigating or defending any
alleged loss, claim, damage, liability or expense and reasonable
legal counsel fees incurred in connection therewith)
(collectively, "Losses"), to which the Indemnified Parties may
become subject under any statute or regulation, or at common law
or otherwise, insofar as such Losses are related to the sale or
acquisition of Trust Shares or the Contracts and
(i) arise out of or are based upon any untrue
statements or alleged untrue statements of any material fact
contained in a disclosure document for the Contracts or in
the Contracts themselves or in sales literature generated or
approved by the Company on behalf of the Contracts or
Accounts (or any amendment or supplement to any of the
foregoing) (collectively, "Company Documents" for the
purposes of this Article V), or arise out of or are based
upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading, provided that
this indemnity shall not apply as to any Indemnified Party
if such statement or omission or such alleged statement or
omission was made in reliance upon and was accurately
derived from written information furnished to the Company by
or on behalf of the Trust for use in Company Documents or
otherwise for use in connection with the sale of the
Contracts or Trust shares; or
(ii) arise out of or result from statements or
representations (other than statements or representations
contained in and accurately derived from Trust Documents as
defined in Section 5.2 (a)(i)) or wrongful conduct of the
Company or persons under its control, with respect to the
sale or acquisition of the Contracts or Trust shares; or
(iii) arise out of or result from any untrue statement
or alleged untrue statement of a material fact contained in
Trust Documents as defined in Section 5.2(a)(i) or the
omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading if such statement or
omission was made in reliance upon and accurately derived
from written information furnished to the Trust by or on
behalf of the Company; or
(iv) arise out of or result from any failure by the
Company to provide the services or furnish the materials
required under the terms of this Agreement; or
(v) arise out of or result from any material breach of
any representation and/or warranty made by the Company in
this Agreement or arise out of or result from any other
material breach of this Agreement by the Company.
(b) The Company shall not be liable under this
indemnification provision with respect to any Losses to which an
Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties
or by reason of such Indemnified Party's reckless disregard of
obligations and duties under this Agreement or to the Trust or
Underwriter, whichever is applicable. The Company shall also not
be liable under this indemnification provision with respect to
any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the Company in writing
within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have
been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on
any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which
it may have to the Indemnified Party against whom such action is
brought otherwise than on account of this indemnification
provision. In case any such action is brought against the
Indemnified Parties, the Company shall be entitled to
participate, at its own expense, in the defense of such action.
The Company also shall be entitled to assume the defense thereof,
with counsel satisfactory to the party named in the action. After
notice from the Company to such party of the Company's election
to assume the defense thereof, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it,
and the Company will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred
by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
(c) The Indemnified Parties will promptly notify the Company
of the commencement of any litigation or proceedings against them
in connection with the issuance or sale of the Trust shares or
the Contracts or the operation of the Trust.
5.2 Indemnification By The Underwriter
(a) The Underwriter agrees to indemnify and hold harmless
the Company, the underwriter of the Contracts and each of its
directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act
(collectively, the "Indemnified Parties" and individually an
"Indemnified Party" for purposes of this Section 5.2) against any
and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Underwriter,
which consent shall not be unreasonably withheld) or expenses
(including the reasonable costs of investigating or defending any
alleged loss, claim, damage, liability or expense and reasonable
legal counsel fees incurred in connection therewith)
(collectively, "Losses") to which the Indemnified Parties may
become subject under any statute, at common law or otherwise,
insofar as such Losses are related to the sale or acquisition of
the Trust's Shares or the Contracts and:
(i) arise out of or are based upon any untrue
statements or alleged untrue statements of any material fact
contained in the Registration Statement, prospectus or sales
literature of the Trust (or any amendment or supplement to
any of the foregoing) (collectively, the "Trust Documents")
or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading, provided that this agreement to
indemnify shall not apply as to any Indemnified Party if
such statement or omission of such alleged statement or
omission was made in reliance upon and in conformity with
information furnished to the Underwriter or Trust by or on
behalf of the Company for use in the Registration Statement
or prospectus for the Trust or in sales literature (or any
amendment or supplement) or otherwise for use in connection
with the sale of the Contracts or Trust shares; or
(ii) arise out of or as a result of statements or
representations (other than statements or representations
contained in the disclosure documents or sales literature
for the Contracts not supplied by the Underwriter or persons
under its control) or wrongful conduct of the Trust, Adviser
or Underwriter or persons under their control, with respect
to the sale or distribution of the Contracts or Trust
shares; or
(iii) arise out of any untrue statement or alleged
untrue statement of a material fact contained in a
disclosure document or sales literature covering the
Contracts, or any amendment thereof or supplement thereto,
or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statement or statements therein not misleading, if
such statement or omission was made in reliance upon
information furnished to the Company by or on behalf of the
Trust; or
(iv) arise as a result of any failure by the Trust to
provide the services and furnish the materials under the
terms of this Agreement (including a failure, whether
unintentional or in good faith or otherwise, to comply with
the qualification representation specified in Section 3.7 of
this Agreement and the diversification requirements
specified in Section 3.6 of this Agreement); or
(v) arise out of or result from any material breach of
any representation and/or warranty made by the Underwriter
in this Agreement or arise out of or result from any other
material breach of this Agreement by the Underwriter; as
limited by and in accordance with the provisions of Sections
5.2(b) and 5.2(c) hereof.
(b) The Underwriter shall not be liable under this
indemnification provision with respect to any Losses to which an
Indemnified Party would otherwise be subject by reason of such
Indemnified Party's willful misfeasance, bad faith, or gross
negligence in the performance of such Indemnified Party's duties
or by reason of such Indemnified Party's reckless disregard of
obligations and duties under this Agreement or to each Company or
the Account, whichever is applicable.
(c) The Underwriter shall not be liable under this
indemnification provision with respect to any claim made against
an Indemnified Party unless such Indemnified Party shall have
notified the Underwriter in writing within a reasonable time
after the summons or other first legal process giving information
of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have
received notice of such service on any designated agent), but
failure to notify the Underwriter of any such claim shall not
relieve the Underwriter from any liability which it may have to
the Indemnified Party against whom such action is brought
otherwise than on account of this indemnification provision. In
case any such action is brought against the Indemnified Parties,
the Underwriter will be entitled to participate, at its own
expense, in the defense thereof. The Underwriter also shall be
entitled to assume the defense thereof, with counsel satisfactory
to the party named in the action. After notice from the
Underwriter to such party of the Underwriter's election to assume
the defense thereof, the Indemnified Party shall bear the
expenses of any additional counsel retained by it, and the
Underwriter will not be liable to such party under this Agreement
for any legal or other expenses subsequently incurred by such
party independently in connection with the defense thereof other
than reasonable costs of investigation.
(d) The Company agrees promptly to notify the Underwriter of
the commencement of any litigation or proceedings against it or
any of its officers or directors in connection with the issuance
or sale of the Contracts or the operation of each Account.
5.3 Indemnification By The Trust
(a) The Trust agrees to indemnify and hold harmless the
Company, and each of its directors and officers and each person,
if any, who controls the Company within the meaning of Section 15
of the 1933 Act (collectively, the "Indemnified Parties" for
purposes of this Section 5.3) against any and all losses, claims,
damages, liabilities (including amounts paid in settlement with
the written consent of the Trust, which consent shall not be
unreasonably withheld) or litigation (including legal and other
expenses) to which the Indemnified Parties may become subject
under any statute, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements result from the gross negligence,
bad faith or willful misconduct of the Board or any member
thereof, are related to the operations of the Trust, and arise
out of or result from any material breach of any representation
and/or warranty made by the Trust in this Agreement or arise out
of or result from any other material breach of this Agreement by
the Trust; as limited by and in accordance with the provisions of
Section 5.3(b) and 5.3(c) hereof. It is understood and expressly
stipulated that neither the holders of shares of the Trust nor
any Trustee, officer, agent or employee of the Trust shall be
personally liable hereunder, nor shall any resort be had to other
private property for the satisfaction of any claim or obligation
hereunder, but the Trust only shall be liable.
(b) The Trust shall not be liable under this indemnification
provision with respect to any losses, claims, damages,
liabilities or litigation incurred or assessed against any
Indemnified Party as such may arise from such Indemnified Party's
willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations and
duties under this Agreement or to the Company, the Trust, the
Underwriter or each Account, whichever is applicable.
(c) The Trust shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified
Party unless such Indemnified Party shall have notified the Trust
in writing within a reasonable time after the summons or other
first legal process giving information of the nature of the
claims shall have been served upon such Indemnified Party (or
after such Indemnified Party shall have received notice of such
service on any designated agent), but failure to notify the Trust
of any such claim shall not relieve the Trust from any liability
which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this
indemnification provision. In case any such action is brought
against the Indemnified Parties, the Trust will be entitled to
participate, at its own expense, in the defense thereof. The
Trust also shall be entitled to assume the defense thereof, with
counsel satisfactory to the party named in the action. After
notice from the Trust to such party of the Trust's election to
assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and
the Trust will not be liable to such party under this Agreement
for any legal or other expenses subsequently incurred by such
party independently in connection with the defense thereof other
than reasonable costs of investigation.
(d) The Company and the Underwriter agree promptly to notify
the Trust of the commencement of any litigation or proceedings
against it or any of its respective officers or directors in
connection with this Agreement, the issuance or sale of the
Contracts, with respect to the operation of either the Account,
or the sale or acquisition of share of the Trust.
ARTICLE VI.
Termination
6.1 This Agreement may be terminated by any party in its
entirety or with respect to one, some or all Portfolios or any
reason by sixty (60) days advance written notice delivered to the
other parties, and shall terminate immediately in the event of
its assignment, as that term is used in the 1940 Act.
6.2 This Agreement may be terminated immediately by either
the Trust or the Underwriter following consultation with the
Trustees upon written notice to the Company if :
(a) the Company notifies the Trust or the Underwriter
that the exemption from registration under Section 3(c) of
the 1940 Act no longer applies, or might not apply in the
future, to the unregistered Accounts, or that the exemption
from registration under Section 4(2) or Regulation D
promulgated under the 1933 Act no longer applies or might
not apply in the future, to interests under the unregistered
Contracts; or
(b) either one or both of the Trust or the
Underwriter respectively, shall determine, in their sole
judgment exercised in good faith, that the Company has
suffered a material adverse change in its business,
operations, financial condition or prospects since the date
of this Agreement or is the subject of material adverse
publicity; or
(c) the Company gives the Trust and the Underwriter
the written notice specified in Section 1.10 hereof and at
the same time such notice was given there was no notice of
termination outstanding under any other provision of this
Agreement; provided, however, that any termination under
this Section 6.2(c) shall be effective forty-five (45) days
after the notice specified in Section 1.10 was given; or
6.3 If this Agreement is terminated for any reason, except
under Article IV (Potential Conflicts) above, the Trust shall, at
the option of the Company, continue to make available additional
shares of any Portfolio and redeem shares of any Portfolio
pursuant to all of the terms and conditions of this Agreement for
all Contracts in effect on the effective date of termination of
this Agreement. If this Agreement is terminated pursuant to
Article IV, the provisions of Article IV shall govern.
6.4 The provisions of Articles II (Representations and
Warranties) and V (Indemnification) shall survive the termination
of this Agreement. All other applicable provisions of this
Agreement shall survive the termination of this Agreement, as
long as shares of the Trust are held on behalf of Contract owners
in accordance with Section 6.3, except that the Trust and the
Underwriter shall have no further obligation to sell Trust shares
with respect to Contracts issued after termination.
6.5 The Company shall not redeem Trust shares attributable
to the Contracts (as opposed to Trust shares attributable to the
Company's assets held in the Account) except (i) as necessary to
implement Contract owner initiated or approved transactions, (ii)
as required by state and/or federal laws or regulations or
judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption"), or
(iii) as permitted by an order of the SEC pursuant to Section
26(b) of the 1940 Act. Upon request, the Company will promptly
furnish to the Trust and the Underwriter the opinion of counsel
for the Company (which counsel shall be reasonably satisfactory
to the Trust and the Underwriter) to the effect that any
redemption pursuant to clause (ii) above is a Legally Required
Redemption. Furthermore, except in cases where permitted under
the terms of the Contracts, the Company shall not prevent
Contract owners from allocating payments to a Portfolio that was
otherwise available under the Contracts without first giving the
Trust or the Underwriter 90 days notice of its intention to do
so.
ARTICLE VII.
Notices.
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set
forth below or at such other address as such party may from time to
time specify in writing to the other party.
If to the Trust or the Underwriter:
Templeton Variable Products Series Fund or
Franklin Xxxxxxxxx Distributors, Inc.
000 X. Xxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxx, Trust Secretary
WITH A COPY TO
Franklin Resources, Inc.
000 Xxxxxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx, Senior Corporate
Counsel
If to the Company:
Keyport Benefit Life Insurance Company
000 Xxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attention: Xxx Xxxxxxx
ARTICLE VIII.
Miscellaneous
8.1 The captions in this Agreement are included for convenience
of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
8.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and
the same instrument.
8.3 If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
of the Agreement shall not be affected thereby.
8.4 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of
Florida. It shall also be subject to the provisions of the federal
securities laws and the rules and regulations thereunder and to any
orders of the SEC granting exemptive relief therefrom and the
conditions of such orders. Copies of any such orders shall be promptly
forwarded by the Trust to the Company.
8.5 The parties to this Agreement acknowledge and agree that all
liabilities of the Trust arising, directly or indirectly, under this
Agreement, of any and every nature whatsoever, shall be satisfied
solely out of the assets of the Trust and that no Trustee, officer,
agent or holder of shares of beneficial interest of the Trust shall be
personally liable for any such liabilities.
8.6 Each party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the
SEC, the NASD, and state insurance regulators) and shall permit such
authorities reasonable access to its books and records in connection
with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby.
8.7 Each party hereto shall treat as confidential the names and
addresses of the Contract owners and all information reasonably
identified as confidential in writing by any other party hereto, and,
except as permitted by this Agreement or as required by legal process
or regulatory authorities, shall not disclose, disseminate, or utilize
such names and addresses and other confidential information until such
time as they may come into the public domain, without the express
written consent of the affected party. Without limiting the foregoing,
no party hereto shall disclose any information that such party has
been advised is proprietary, except such information that such party
is required to disclose by any appropriate governmental authority
(including, without limitation, the SEC, the NASD, and state
securities and insurance regulators).
8.8 The rights, remedies and obligations contained in this
Agreement are cumulative and are in addition to any and all rights,
remedies and obligations, at law or in equity, which the parties
hereto are entitled to under state and federal laws.
8.9 The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect, except as provided in
Section 1.10.
8.10 Neither this Agreement nor any rights or obligations
hereunder may be assigned by either party without the prior written
approval of the other party.
8.11 No provisions of this Agreement may be amended or modified
in any manner except by a written agreement properly authorized and
executed by both parties.
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Participation Agreement as of the date and
year first above written.
The Company:
Keyport Benefit Life Insurance Company
By its authorized officer
By: /s/Xxxxxxx X. Xxxxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: SVP & GC
The Trust:
Templeton Variable Products Series Fund
By its authorized officer
By: /s/Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: Assistant Vice President, Assistant
Secretary
The Underwriter:
Franklin Xxxxxxxxx Distributors, Inc.
By its authorized officer
By: /s/Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President, Assistant
Secretary
SCHEDULE A
Separate Accounts of
Keyport Benefit Life Insurance Company
1. Variable Account A
Date Established: January 30, 1996February 6, 1998
SEC Registration Number: 333-104345727
SCHEDULE B
Trust Portfolios and Classes Available
Templeton Variable Products Series Adviser
Xxxxxxxxx Developing Markets Fund Xxxxxxxxx Asset Management Ltd.
-Class 2
SCHEDULE C
Variable Annuity Contracts
Issued by Keyport Benefit Life Insurance Company
Contract 1 Contract 2
Contract 3
Contract/Product Name Keyport Advisor Optima
Keyport Advisor Charter
Registered (Y/N) Yes
SEC Registration Number 333-
Representative Form
Numbers DVA(1)/CERT (NY)
DVA(1)/IND
DVA(1)(NY)
Separate Account Name Variable Account A
SEC Registration Number 333-104345727
Templeton Variable
Products Series
Portfolios and Classes
(Adviser) Xxxxxxxxx Developing
Markets Fund - Class 2
(Xxxxxxxxx Asset
Management Ltd.)
SCHEDULE D
Other Portfolios Available under the Contracts
Col. Sm Cap Value
Col. High Yield
Col. Strategic Inc.
Col. US Stock
Col. International Horizons
Col. Global Equity
SR Growth Stock
SR MMF
SR Global Utilities
SR Balanced
Liberty All-Star
Newport Xxxxx
XX Mortgage Securities
Progress High Alpha Concentration
Crabbe Huson Real Estate
Xxxxx Small Cap
Xxxxx Growth
Alliance Premier Growth
Alliance Global Bond
Alliance Technology Fund
AIM V.I. Value
AIM V.I. Cap App. (Constellation)
SCHEDULE E
RULE 12B-1 PLANS
Compensation Schedule
Each Portfolio named below shall pay the following amounts
pursuant to the terms and conditions referenced below under its
Class 2 Rule 12b-1 Distribution Plan, stated as a percentage per
year of Class 2's average daily net assets represented by shares
of Class 2.
Portfolio Name Maximum Annual Payment Rate
XXXXXXXXX DEVELOPING MARKETS FUND 0.25%
Agreement Provisions
If the Company, on behalf of any Account, purchases Trust
Portfolio shares ("Eligible Shares") which are subject to a Rule
12b-1 Plan adopted under the 1940 Act (the "Plan"), the Company
may participate in the Plan.
To the extent the Company or its affiliates, agents or
designees (collectively "you") you provide administrative and
other services which assist in the promotion and distribution of
Eligible Shares or Variable Contracts offering Eligible Shares,
the Underwriter, the Trust or their affiliates (collectively,
"we") may pay you a Rule 12b-1 fee. "Administrative and other
services" may include, but are not limited to, furnishing
personal services to owners of Contracts which may invest in
Eligible Shares ("Contract Owners"), answering routine inquiries
regarding a Portfolio, coordinating responses to Contract Owner
inquiries regarding the Portfolios, maintaining such accounts or
providing such other enhanced services as a Trust Portfolio or
Contract may require, maintaining customer accounts and records,
or providing other services eligible for service fees as defined
under NASD rules. Your acceptance of such compensation is your
acknowledgment that eligible services have been rendered. All
Rule 12b-1 fees, shall be based on the value of Eligible Shares
owned by the Company on behalf of its Accounts, and shall be
calculated on the basis and at the rates set forth in the
Compensation Schedule stated above. The aggregate annual fees
paid pursuant to each Plan shall not exceed the amounts stated as
the "annual maximums" in the Portfolio's prospectus, unless an
increase is approved by shareholders as provided in the Plan.
These maximums shall be a specified percent of the value of a
Portfolio's net assets attributable to Eligible Shares owned by
the Company on behalf of its Accounts (determined in the same
manner as the Portfolio uses to compute its net assets as set
forth in its effective Prospectus).
You shall furnish us with such information as shall
reasonably be requested by the Trust's Boards of Trustees
("Trustees") with respect to the Rule 12b-1 fees paid to you
pursuant to the Plans. We shall furnish to the Trustees, for
their review on a quarterly basis, a written report of the
amounts expended under the Plans and the purposes for which such
expenditures were made.
The Plans and provisions of any agreement relating to such
Plans must be approved annually by a vote of the Trustees,
including the Trustees who are not interested persons of the
Trust and who have no financial interest in the Plans or any
related agreement ("Disinterested Trustees"). Each Plan may be
terminated at any time by the vote of a majority of the
Disinterested Trustees, or by a vote of a majority of the
outstanding shares as provided in the Plan, on sixty (60) days'
written notice, without payment of any penalty. The Plans may
also be terminated by any act that terminates the Underwriting
Agreement between the Underwriter and the Trust, and/or the
management or administration agreement between Franklin Advisers,
Inc. or Xxxxxxxxx Investment Counsel, Inc. or their affiliates
and the Trust. Continuation of the Plans is also conditioned on
Disinterested Trustees being ultimately responsible for selecting
and nominating any new Disinterested Trustees. Under Rule 12b-1,
the Trustees have a duty to request and evaluate, and persons who
are party to any agreement related to a Plan have a duty to
furnish, such information as may reasonably be necessary to an
informed determination of whether the Plan or any agreement
should be implemented or continued. Under Rule 12b-1, the Trust
is permitted to implement or continue Plans or the provisions of
any agreement relating to such Plans from year-to-year only if,
based on certain legal considerations, the Trustees are able to
conclude that the Plans will benefit each affected Trust
Portfolio and class. Absent such yearly determination, the Plans
must be terminated as set forth above. In the event of the
termination of the Plans for any reason, the provisions of this
Schedule E relating to the Plans will also terminate.
Any obligation assumed by the Trust pursuant to this Agreement
shall be limited in all cases to the assets of the Trust and no
person shall seek satisfaction thereof from shareholders of the
Trust. You agree to waive payment of any amounts payable to you
by Underwriter under a Plan until such time as the Underwriter
has received such fee from the Fund.
The provisions of the Plans shall control over the provisions of
the Participation Agreement, including this Schedule E, in the
event of any inconsistency.
You agree to provide complete disclosure as required by all
applicable statutes, rules and regulations of all rule 12b-1 fees
received from us in the prospectus of the contracts.
